Fresenius raises $1.3B for Klinikum bid - The Deal Pipeline (SAMPLE CONTENT: NEED AN ID?)
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Fresenius raises $1.3B for Klinikum bid

by Andrew Bulkeley  |  Published May 11, 2012 at 9:30 AM
German pharmaceuticals and medical equipment company Fresenius SE & Co. KGaA on Friday, May 11, sold 13.8 million new shares - equivalent to 7.8% of the expanded share capital - to institutional investors, raising cash for its unsolicited €3.1 billion ($4 billion) bid for listed hospitals operator Rhön-Klinikum AG.

Investors paid €73.50 each for the shares, raising €1 billion for Fresenius and garnering a 5.4% discount to Thursday's closing price. The accelerated bookbuilding was managed by Deutsche Bank AG, J.P. Morgan Chase & Co. and Société Générale SA.   

Bad Neustadt an der Saale, Germany-based Rhön-Klinikum has yet to make a recommendation on the proposed acquisition but founder Eugen Münch has committed his 12.5% stake to the offer. Analysts have said the hefty 52.3% premium offered by Fresenius highlights the suitor's determination to become Germany's biggest hospitals operator and makes a competing offer unlikely.
 
Fresenius, of Bad Homburg, Germany, in April said it would offer €22.50 per share to take Rhön private.

"The share sale emphasizes the healthcare company's confidence that the deal will be completed as expected," wrote UBS analyst March Bäumer in a Friday note. He has a buy rating on Fresenius shares. 

WestLB's Oliver Kämmerer said he was surprised at how quickly Fresenius launched the offer after announcing the approach but speculated that the company feared weaker market conditions later this year.
 
The company has been open about its desire to exploit a broad privatization of the Germany's largely municipally owned, €70 billion hospital market. It entered the field in 2005 with the €1.5 billion acquisition of Helios Kliniken GmbH and has stuck a series of smaller acquisitions since.
 
The Else-Kröner-Fresenius-Stiftung foundation, which was founded by heirs of the company's founder and holds 29% of Fresenius, bought €90 million worth of the shares in the share issue.
 
Fresenius will use a syndicated loan, a bond issue and unspecified equity instruments to cover the rest of the cost of Klinikum.
 
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Tags: Fresenius SE & Co. | medical equipment | pharmaceutical | Rhön-Klinikum AG

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